Sangamo Therapeutics, inc (SGMO) Q2 2021 Earnings Call Transcript

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Sangamo Therapeutics, inc (SGMO -0.27%)
Q2 2021 Earnings Call
Aug 5, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, everyone and thank you for standing by. Welcome to the Sangamo Second Quarter Of 2021 Teleconference Call. [Operator Instructions]

I would now like to hand the conference over to your speaker today, the Head of the Corporate Communications, Ms. Aron Feingold. Please go ahead.

Aron Feingold -- Vice President, Head of Corporate Communications

Good afternoon and thank you for joining us today. With me this afternoon on this call are several members of the Sangamo executive leadership team, including Sandy Macrae, Chief Executive Officer; Mark McClung, Chief Business Officer; Prathyusha Duraibabu, Chief Financial Officer; Jason Fontenot, Chief Scientific Officer, Rob Schott, Head of Development; and Bettina Cockroft, Chief Medical Officer. Slides from our corporate presentation can be found on our website, sangamo.com, under the Investors and Media section on the Events and Presentations page.

This call includes forward-looking statements regarding Sangamo's current expectations. These statements include, but are not limited to, statements relating to potential value drivers, clinical catalysts and advancement of our preclinical pipeline. Plans and timelines for enrolling and conducting clinical trials and presenting clinical data, potential clinical data outcome, our 2021 financial guidance, our expectations regarding our financial performance and sufficiency of our cash resources, and other statements that are not historical facts. Actual results may differ materially from what we discuss today. These statements are subject to certain risks and uncertainties that are discussed in our filings with the SEC, specifically our annual report on Form 10-K for the fiscal year ended December 31, 2020, as supplemented by our quarterly report on Form 10-Q for the fiscal quarter year, ended June 30, 2021. The forward-looking statements stated today are made as of this date and we undertake no duty to update such information, except as required by law. On this call we discuss our non-GAAP operating expenses. Reconciliation of this measure to our GAAP operating expenses can be found in today's press release, which is available on our website.

Now, I'd like to turn the call over to our CEO, Sandy Macrae.

Sandy Macrae -- President and Chief Executive Officer

Thank you, Aron, and good afternoon to everyone on the call. This is an exciting time at Sangamo, as we look forward to multiple clinical catalysts over the next several quarters, representing potential near-term value drivers. At the same time, we are advancing our promising preclinical pipeline, that focuses is on our differentiated CAR-Treg approach for autoimmune diseases, and genome engineering for CNS diseases toward INDs, representing [Phonetic] potential mid-term value drivers. Beyond that we continue to invest in early stage research, to further mine value from our core zinc finger platform.

We continue to make steady progress on our wholly owned Fabry disease Phase I/II clinical study. During the quarter, we dosed a fourth patient and based on initial safety data for patients dosed to date, the safety monitoring committee endorsed dose escalating to the third dose, as planned under the study protocol. We are currently screening patients for the third dose cohort, and expect to dose the first two patients in this third cohort, by the end of the year. We will make a decision on when to first present initial data from this study, depending on clinical timelines, and will publicly announce our plans when available.

In addition, we currently have three sites open, in what we believe is the first in-human CAR-Treg study, and we plan to enroll the first patient at the end of this year. We're very excited about this study. We believe this proof-of-concept study evaluating TX200 in kidney transplant rejection will help us understand CAR-Treg pharmacology and biology in humans, as well as advance process development knowledge. We hope this study establishes a foundation for a portfolio of wholly owned CAR-Treg therapies for autoimmune indications.

In the fourth quarter this year, we and Pfizer expect to present two year results from the Phase I/II Alta study in hemophilia A. We look forward to having a clear understanding of durability through two years from the five patients in the high dose cohort, from the Phase I/II Alta study, as well as from the Phase III data from additional patients that we expect to read out in 2022. Together, these data will be highly informative about the potential product profile.

In addition, later this year, we and our partner Sanofi expect to share initial Phase I/II data from our PRECISION I study at an upcoming medical meeting. The study is investigating SAR445136 for the treatment of sickle cell disease. We expect to report interim efficacy and safety data for the first four patients, dosed with the least three months of follow-up.

Finally, Biogen recently selected a fourth neurological disease gene target under a collaboration agreement, and we have begun early research activities on therapies addressing this target.

This quarter, our former General Counsel, Gary Loeb made the personal decision to leave Sangamo for another opportunity. We thank him and wish him well in his future. However, we are pleased today to announce that we have promoted Scott Willoughby to General Counsel and Corporate Secretary. Scott has contributed significantly to Sangamo, overseeing all corporate law and compliance matters since he joined us in March 2020. Scott has over 20 years of legal experience, with expertise in corporate governance, SEC reporting, corporate finance, compliance, mergers and acquisitions, and transactions.

In addition to Scott's appointment, our executive team was recent strengthened by the appointment of our new Chief Financial Officer, Prathyusha Duraibabu. Prathyusha has served as Sangamo's Principal Accounting Officer for nearly two years. She has contributed significantly with a wealth of experience and her proven track record in optimizing financial strategy and operations, driving organizational change and building diverse teams. It is so pleasing to promote from within talented individuals, and I look forward to Scott and Prathyusha's leadership.

And with that, I will turn the call over to Prathyusha for a financial update.

Prathyusha Duraibabu -- Senior Vice President and Chief Financial Officer

Thank you, Sandy, and good afternoon. It has been my pleasure to serve as Sangamo's Chief Financial Officer for the past few months, and I look forward to continued interactions with all of you, as we progress our business forward. Our financial results for this quarter are available in the press release issued this afternoon, which can be found on our website.

This quarter, we continue to invest in the advancement of our clinical programs, our preclinical research pipeline, and expanding our in-house manufacturing capabilities. We ended the quarter with approximately $579 million in cash, cash equivalents and marketable securities. We believe that our balance sheet remains strong, and will allow us to reach several important R&D milestones, including the potential submission of a BLA for our hemophilia A product candidate.

Turning to 2021 full year guidance; we would like to reiterate the guidance we provided in our prior call; we continue to expect non-GAAP operating expenses, which exclude estimated non-cash stock-based compensation expense of approximately $30 million, to be in the range of $255 million to $275 million for the year.

We will now turn it over to the operator to open the line for questions. Operator?

Questions and Answers:

Operator

Thank you. [Operator Instructions] And our first question is from Maury Raycroft of Jefferies. Please go ahead.

Kevin Strang -- Jefferies -- Analyst

Hi. This is Kevin on the line for Maury today. Thank you for taking my questions. So for TX200, there were some prior disclosures, I think from TxCell, which discussed use of Box B3 and use of lentivirus and there are a number of CAR-Treg competitors moving forward in this space. On the technical side, what should investors be focused on, when trying to appreciate differentiation of Sangamo's approach with TX200, versus what competitors are doing?

Sandy Macrae -- President and Chief Executive Officer

Thank you for your question. I think this is one that would be best answered by Jason, our Chief Scientific Officer, Jason?

Jason Fontenot -- Senior Vice President, Chief Scientific Officer

Yeah. Thank you, Sandy. So Sangamo, the partnership that Sangamo started with TxCell, with the acquisition of the legacy TxCell Group, brought together our extraordinary genomic engineering platform, with the expertise that TxCell has built in Treg biology over the years. And that work has only grown and matured over the last years, as we continue to push forward our TX200 program, as well as programs that we are advancing behind that, for multiple sclerosis and inflammatory bowel disease. And in addition to that we are very invested in moving from an autologous cell therapies to allogeneic cell therapies, through the use of our zinc finger genomic engineering platform, and through our partnership with Mogrify, and our internal work on iPSCs. So the real differentiator for me, between what Sangamo is doing and what these new entrants into the field are, is simply the breadth of expertise that we have, and the time that we've invested here. And we're super excited about the programs, and the potential to really transform the treatment of autoimmune disease.

Kevin Strang -- Jefferies -- Analyst

Great, thanks. And then just on the AAV side. So when considering discussion on AAV safety and awaiting the immune system, Sangamo has been an innovator there. Are there any new developments on the AAV side that you can talk about, particularly with AAVs that can be used with your neuro programs?

Sandy Macrae -- President and Chief Executive Officer

So thank you for that question too. We continue to invest in a group within Jason's organizations that are looking at optimizing AAV use with the CNS. We spoke about this year at ASGCT and we'll talk about it, as the data evolves. We have some very smart scientists doing this, and we are of the opinion that delivery is so important for genomic engineering, it goes hand-in-hand with the molecular biology of the zinc fingers, and we look forward to sharing more data in the months to come.

Kevin Strang -- Jefferies -- Analyst

Great. Thanks for taking my questions.

Operator

And our next question is from Yanan Zhu of Wells Fargo Securities. Please go ahead.

Yanan Zhu -- Wells Fargo Securities -- Analyst

Hi. Thanks for taking my questions. So a question on the Fabry disease program. I guess I'm wondering for you to determine a dose, to move into the dose expansion, what data point or data points would you pay attention to, and what kind of a follow-up would you require, in order to make that call? And also each dose level has only two patients, do you feel that you have enough data points to make a determination of the dose for the expansion? And lastly, how many patients do you think you would enroll into the dose expansion study? Thank you.

Sandy Macrae -- President and Chief Executive Officer

Thank you. And important questions about a study that is -- that we're very passionate. So can I turn this to Mark and then get Rob to add in from a clinical point. But let's start with Mark.

Mark McClung -- Executive Vice President, Chief Business Officer

Yeah, so thanks for your question. A lot of these questions are related to the trial. I mean, as you probably are aware, the STAR study's primary endpoint is safety and tolerability. The secondary endpoints are pharmacodynamics of alpha-Gal A, and the presence of the substrates in the plasma over time. As well as the impact on eventual ERT administration. What I'll do is maybe hand it over to Rob, to answer the specific questions, in terms of where we're at with the dosing cohorts, and how we will progress into the expansion cohort. Rob?

Rob Schott -- Senior Vice President, Head of Development

Yes, thank you. Very good question. We have announced that the DMSB, basically the Data Safety and Monitoring Board has met and has endorsed our moving to the third dose cohort. So we have fulfilled the safety requirements, and additional requirements for the independent DMSB to allow us to proceed to our highest dose cohort. We're not disclosing at this point the specifics of that, but we are moving to that cohorts and plan to dose the next two patients in the cohort this year, and we'll be sharing data, along the clinical timelines that are appropriate. But again, the most important piece of information that we're sharing with respect to your question, is that the DMSB approved unanimously the third dose cohort.

Yanan Zhu -- Wells Fargo Securities -- Analyst

Okay, got it. Got it. Thanks for the color.

Operator

And our next question is from Geoff Meacham, Bank of America. Please go ahead.

Aspen Mori -- Bank America -- Analyst

Hey guys, it's Aspen on for Geoff. Thanks for the questions. So just kind of follow up on the last question, can you remind us on the dose levels, the three dose levels for Fabry? I know obviously in some other gene therapy trials in the past, the lower doses weren't quite as adequate and higher doses kind of address the level of efficacy. Some other companies were looking for different programs. I guess I'm just trying to get a sense of, is it that what we're seeing here, or was this dose escalation always kind of part of the plan? And you know, based on this dose escalation, is the primary driver the alpha-Gal levels that you're looking at to see. Yeah. Thank you.

Sandy Macrae -- President and Chief Executive Officer

So let me say this, and I know this must be so frustrating for all of you. We have not revealed the dose cycles that we're going in, other than those three cohorts. We have learned a great deal from the hemophilia A study, about the kind of levels that are appropriate, and it's always patient [Technical Issues] about starting at a dose that gives the patient some hope of benefit, versus being prudent for something that is the first time that's ever going into a human. And we are immensely grateful for patients coming in, taking that first dose, not knowing until we see the results, where there has been any benefit to them. So we're going to have three doses and we hope to be able to describe the dose effect across the three doses.

Aspen Mori -- Bank America -- Analyst

Okay, thanks. And maybe just one quick follow-up. So the FDA is listing an ADCOM I think in early September on AAV. Maybe just help us frame what your expectations for that are, if you'll be at all involved in that meeting? Would love to hear your opinion on that?

Sandy Macrae -- President and Chief Executive Officer

We have a group of our staff that will be attending virtually or in person that meeting. Each company has dosed a few patients with AAV and that the agency has the greatest store of knowledge on the safety and efficacy of AAV, and so I I'm looking forward to the meeting and looking forward to hearing the things that the agency sees across many programs. So that we can all learn, and the patients can be protected as much as possible.

Rob Schott -- Senior Vice President, Head of Development

Okay, great. Thanks, Sandy.

Operator

And our next question is from Gena Wang of Barclays. Please go ahead.

Gena Wang -- Barclays -- Analyst

Thank you. My first question was a follow-up on the Fabry disease, the program, and just wanted to ask the -- exactly what kind of a level, if you can give a little bit more quantitative answer regarding what volume you are looking for, to define as right dose? For example the lyso-Gb3 are we talking about over 50% reduction, or even below ERT level. So this is the first question. Second question is the hemophilia A program, just wondering, if two-year factor A level had some decline, do you expect FDA will ask for longer than one year follow-up for the Phase III study?

Sandy Macrae -- President and Chief Executive Officer

Good afternoon, Gena. So let me answer those questions in reverse order. Pfizer is handling the communication and the regulatory interactions around hemophilia A, and I am so pleased that our baby has been looked after Pfizer, and I know that they will do a great job in having those regulatory conversations. Around Fabry, Mark, do you want to discuss that of what we're looking for -- to determine success?

Mark McClung -- Executive Vice President, Chief Business Officer

Sorry, apologies. The program goal is to, to look for a predictable durable expression of the alpha-Gal A enzyme. And then to see whether or not their results in accumulation of the substrates of Gb3 and its soluble derivative lyso-Gb3 go down. We've not commented on the amounts that we're expecting to see. As Sandy mentioned, we've dosed the first four patients. We're moving into screening for the third dose cohort, which is terrific and hopefully we'll have an update for you by the end of the year in terms of when you might start seeing some of that data.

Ritu Baral -- Cowen -- Analyst

Sorry to be pressing, just wondering, I understand you cannot talk about the first two cohort data, but just wondering, what is your goal to determine OK, that's the right dose.

Sandy Macrae -- President and Chief Executive Officer

We've not commented on that Gena. I mean, I know some of the other companies have commented on their percent substrate reduction. AVROBIO has done that. But our belief is obviously, you'd want to see a fairly significant reduction in the substrate because that seems to link to the improvement in the decline of the EGFR, which is really important for patients.

Gena Wang -- Barclays -- Analyst

Okay, that's fair. Thank you.

Jason Fontenot -- Senior Vice President, Chief Scientific Officer

But Gena, I'd want to strike a note of caution issue interpret the AVROBIO data. The reduction in Gb3 will depend, and life of Gb3 will depend on -- and lyso-GB3 will depend upon your start. So if you have a high level of lyso-Gb3 and your compound is effective, you get a reduction. If your lyso-Gb3 is already at a low level due to ERT -- [Technical Issues] will do a reduction. The dramatic graph that AVRIOBIO shows, is an artifact of the patient that they recruited.

Gena Wang -- Barclays -- Analyst

Okay, thank you.

Operator

And our next question is from Ritu Baral of Cowen. Please go ahead.

Ritu Baral -- Cowen -- Analyst

Hi guys. I want to just follow up on Fabry again. Can you -- I know you can't really tell us about the safety findings, but can I ask if what has been observed and learned in the cohorts to date and the preclinicals, I guess investigation to date. What does it tell you about and the safety of the program -- and not just the standard AAV liver or complement issues, but also cardiac safety within the Fabry population, just given competitive program, [Indecipherable] signals, is this something worth reading patients out for or is this something that could be unique to various programs? And then I have a follow-up.

Sandy Macrae -- President and Chief Executive Officer

So let me answer that slightly tangentially. It's remarkable because we have dosed with AAV6 across a number of programs, and other than the occasional immune response, allergy response, or the occasional AOT, considering how much virus we're giving, it is remarkably safe. These viruses are -- the safety of them is very encouraging. The second thing is, that we do not determine the safety ourselves, they have a DSMB that overviews all of the safety and allows us to carry on. I imagine that freeline has a DSMB or some safety monitoring committee that had them -- that would have judged their cardiac events and given them cancel, on whether or not, they could then advance. We have had very clear unanimous response from our DSMB.

Ritu Baral -- Cowen -- Analyst

Got it. That is very helpful. And then just because manufacturing buildout is prominently featured in the update, how should we be thinking about capex allocation for the manufacturing build out, across selling programs?

Sandy Macrae -- President and Chief Executive Officer

Prathyusha, do you have thoughts on that?

Prathyusha Duraibabu -- Senior Vice President and Chief Financial Officer

Our manufacturing build, that is going to be based on what we need across the different programs and we will assess it in the next six months to 18 months.

Ritu Baral -- Cowen -- Analyst

Got it, OK.

Sandy Macrae -- President and Chief Executive Officer

I'm so glad we invested in manufacturing 18 months, two years ago and they are -- they have completed the AAV manufacturing. They are on track to do cell therapies manufacturing in Brisbane and Valbonne by the end of the year. And the reason I say that is, there is -- between idea and clinical material and manufacturing, is over a year, no matter who does it. And there is a queue you know, at the CMO store manufacturing slots. But more importantly, if you look at what's happened with other AAV companies, it's about quality of manufacturing is the most important regulatory discussion. And I feel by having our research group side by side with our manufacturing group, to do process development, we have the best chance or the best product and the process is the product. And so, I think it was a wise investment we made.

Ritu Baral -- Cowen -- Analyst

Got it. And then Sandy, I just want to triangulate your comments into the slides that were sent around today, especially in relation to the Biogen collaboration. You had mentioned progress in the Biogen program with an undisclosed target. I want to make sure it's that, like on slide 22 you have alpha Synuclein Tauopathies and undisclosed. You're referring specifically to that undisclosed neurology target, or should we be thinking about progress in one of the three?

Sandy Macrae -- President and Chief Executive Officer

Jason, can you help us entangle that? How many targets are on the go now in Biogen?

Jason Fontenot -- Senior Vice President, Chief Scientific Officer

We now have four -- sorry about that. We now have four targets in the Biogen collaboration and we're thrilled to see them progressing. It's great to be working with a partner like Biogen. I think that the fact that we are progressing on all of these targets, is a reflection of just how much confidence the Biogen team has in the work that the Sangamo team is doing to support these programs. So I'm really looking forward to when Biogen can tell everyone more about the targets, and about the work that we're doing and when it's appropriate, we will certainly be able to publish the work that we've been doing, to support the team.

Sandy Macrae -- President and Chief Executive Officer

And Jason before you go back on mute, we recently had a very positive meeting with Jay and the team from NIBR.

Jason Fontenot -- Senior Vice President, Chief Scientific Officer

Yeah. Yet another example of the work that we're doing in the CNS, and another example of what I think is one of the really differentiated aspects of our platform, both from a functionality point of view, and in our ability to use zinc finger transcriptional activators and transcriptional repressors, to modify cells in a therapeutically relevant way. So we're really excited about that collaboration as well, and we're looking forward to the output of both of those collaborations, and kind of building on the expertise in the CNS area that is supporting both of those programs, we are also advancing some internal effort in the CNS, and we'll be talking about those, when it's appropriate, as well.

Ritu Baral -- Cowen -- Analyst

Got it. So you've got two undisclosed neurology targets with Biogen, along with 502 alpha synuclein and 501 tauopathies, correct?

Sandy Macrae -- President and Chief Executive Officer

Correct, correct.

Ritu Baral -- Cowen -- Analyst

Got it. Thank you.

Sandy Macrae -- President and Chief Executive Officer

Welcome.

Operator

And for the last and final question from Ben Burnett of Stifel. Please go ahead.

Kailie Briza -- Stifel -- Analyst

Hi, this is Kailie Briza on for Ben Burnett, thanks for taking our question. We just have a question around TX200, and I was just wondering if you could elaborate on how the CAR is designed, and if you've disclosed, is it co-stimulatory domain? As well as what do you expect the expansion connects to be in the transplant setting, relative to what you see in oncology? Thank you.

Sandy Macrae -- President and Chief Executive Officer

Jason, we haven't said much on this. Can you give whatever guidance you can?

Jason Fontenot -- Senior Vice President, Chief Scientific Officer

Yeah. So I am not sure if we have disclosed the construct for our CAR. But needless to say, we are leveraging the learnings from the oncology field, and the advancements that have been made in cell therapy and oncology, is what we are building upon. You know without that work, there would not be the CAR-Treg programs that we're advancing. That being said, there are some very different biology at work within regulatory T cells, and that's where the work that the TxCell team did, and then since the acquisition, the Sangamo team have been doing over the years to really understand the optimal CAR construct, and the optimal ways to purify ourselves and expand ourselves, in advance of infusing into the patient. It's all really paying off, because this is work that is specific to T-regs and there are things that were not obvious based on the oncology experience, and that deep understanding of the T-reg biology is what we're bringing to bear on the TX200 program, and we're really excited to see it move forward.

Kailie Briza -- Stifel -- Analyst

Thank you. I was wondering also, if you would be able to give any details when you expect to disclose proof of concept data for this study?

Jason Fontenot -- Senior Vice President, Chief Scientific Officer

I am very...

Sandy Macrae -- President and Chief Executive Officer

Let me have -- let me help you with that one Jason.

Jason Fontenot -- Senior Vice President, Chief Scientific Officer

Yeah, we haven't guided, and we'll do that as soon as it's appropriate. The first thing that we're testing, is the safety obviously, and when we have data available, we will certainly share it. But that we haven't disclosed that at the moment.

Kailie Briza -- Stifel -- Analyst

Thank you.

Operator

Thank you, everyone. And at this point, I would like to turn it over to Aron Feingold, the Head of the Corporate Communications.

Aron Feingold -- Vice President, Head of Corporate Communications

Thank you once again for joining us today and for your questions. We look forward to keeping you updated on our future developments.

Operator

[Operator Closing Remarks].

Duration: 33 minutes

Call participants:

Aron Feingold -- Vice President, Head of Corporate Communications

Sandy Macrae -- President and Chief Executive Officer

Prathyusha Duraibabu -- Senior Vice President and Chief Financial Officer

Jason Fontenot -- Senior Vice President, Chief Scientific Officer

Mark McClung -- Executive Vice President, Chief Business Officer

Rob Schott -- Senior Vice President, Head of Development

Kevin Strang -- Jefferies -- Analyst

Yanan Zhu -- Wells Fargo Securities -- Analyst

Aspen Mori -- Bank America -- Analyst

Gena Wang -- Barclays -- Analyst

Ritu Baral -- Cowen -- Analyst

Kailie Briza -- Stifel -- Analyst

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